Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

A Member of the Law Professor Blogs Network

Monday, January 26, 2015

Approaching Issues of Capacity

Writing 2

While capacity can be an issue at any age, it is statistically most common among the elderly.  Many people decline in mental and physical ability as they age and capacity becomes a concern.  However, it is a well-known pillar of capacity law that practitioners cannot assume that capacity is an issue.  It is the professional’s responsibility to probe and verify in order to confirm or dispel any concerns surrounding an assessment of capacity. 

An advisable way to approach extracting issues of capacity with an elderly individual is through delicate conversation and encouraging openness.  Though it is important to avoid offending clients who may be uncomfortable, this is a crucial issue to ensure proper estate planning.  Sometimes, apparent symptoms of incapacity can result from cultural differences between client and lawyer.  Other times, apparent cultural issues can mask signs of incapacity.  As a lawyer, information regarding capacity may govern whether or not you can take instructions or act for the person, or whether any will prepared will ultimately be valid. 

See Ian M. Hull, How Lawyers Should Approach Issues of Mental Capacity, The Huffington Post Canada, Jan. 24, 2015.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

January 26, 2015 in Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, Professional Responsibility, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, January 8, 2015

Losing Faith In JPMorgan

JPMorgan

Self-dealing allegations of JPMorgan Chase & Co. made by two churches expose an area inside the largest U.S. bank that illustrates the potential for conflicting interests—a trust business that invests in the bank’s own products. 

The churches say that JPMorgan, which was entrusted to manage funds to support the churches' good works, put its own financial interests first.  The claims came after other religious orders pressed the bank for a report on its business standards, prompting it to release almost 100 pages last month describing its efforts to augment ethics and compliance. 

Christ Church Cathedral in Indianapolis said JPMorgan breached its duty as trustee by investing the church’s $31 million trust largely in products that generated revenue for the bank, with some fees exceeding 8 percent a year. The bank invested in these and other “toxic” products, the church alleged in an August lawsuit, resulting in a “surreptitious transfer of wealth from the Christ Church trusts to JPMorgan.”  These decisions cost the trust $13 million over nine and a half years, said the church suit. 

JPMorgan has denied wrongdoing in connection with its trust business and said the trust had a positive return from 2006 to 2013.  The bank stepped down as Christ Church Cathedral’s trustee a year ago, and in October sought to dismiss the suit saying the church did not have standing to file a securities claim in part because it did not buy or sell securities and the allegations were not specific.  “The church is painting a grossly inaccurate picture of how the trust was managed, cherry-picking funds that did not perform well and failing to mention multiple funds that performed very well.”

See Neil Weinberg, Losing Faith in JPMorgan, Two Churches Claim Self-Dealing, Bloomberg Businessweek, Jan. 8, 2015.

January 8, 2015 in Current Affairs, Estate Planning - Generally, Professional Responsibility, Religion, Trusts | Permalink | Comments (1) | TrackBack (0)

Tuesday, January 6, 2015

Lawyer Sentenced For Stealing From Veteran's Estate

Gavel 4

Today an attorney was sentenced to sixteen months in prison for siphoning $262,000 from the estate of a disabled Army veteran. 

Cuyahoga County Common Pleas Judge Timothy McCormick sentenced Kevin Purcell, 62, after hearing how the attorney stole the money from the estate of John Kane, who suffered from schizophrenia.  “There is a special place in hell waiting for attorneys who steal from the defenseless,” said an assistant Cuyahoga County prosecutor. 

Purcell served as a guardian for Kane since 1993 and administrator of his estate after he died in 2012.  Last month, he pleaded guilty to aggravated theft and agreed to never practice law again.  He also was ordered to pay restitution to Kane’s estate. 

See John Caniglia, Lawyer Gets 16 Months in Prison for Fleecing the Estate of a Disabled Army Vet, Cleveland.com, Jan. 6, 2015. 

January 6, 2015 in Estate Planning - Generally, Guardianship, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Monday, January 5, 2015

DC Comics Widow Allegedly Defrauded By Workers

Superman

An elderly widow of the DC Comics publisher who brought Superman to news stands, was taken advantage of when she was convinced to leave large sums of cash from her $50 million estate to two real-life Lex Luthors. 

The son of the late widow, Shirley Liebowitz, accused her lawyers Dennis Drebsky and her business manager Ronald Krause of inserting themselves into his mom’s will and isolating her from him and other family members.  "The story that is unfolding is clearly one of elder abuse, fraud and undue influences," the son's lawyer, Jason Blasberg, wrote recently in a court filing. 

Liebowitz died at 96 on April 24, 2013, but during the last 12 years of her life, Krause and Drebsky drafted 28 wills for her. In later versions, her son's bequest drastically dropped while the lawyer and business manager's inheritances ballooned, according to Blasberg's filing.

However, in court filings responding to the accusations, Drebsky and Krause said they were not villains and denied that they conspired to influence Liebowitz's decisions about her will.  Krause added that he never interfered with Liebowitz's will or finances, noting that her decisions about inheritances changed with her mood swings.  Liebowitz "used her money in general, and her will in particular, as both a punishment and a reward," Krause wrote. "If the wind blew the wrong direction on a given day, she would reduce your bequest. Conversely, if you jumped through hoops to satisfy her demands, she would reward you."

See James Fanelli, Widow of DC Comics Co-Founder Was Conned By Workers, Son Says, DNA Info, Jan. 5, 2015. 

January 5, 2015 in Elder Law, Estate Administration, Estate Planning - Generally, Professional Responsibility, Wills | Permalink | Comments (1) | TrackBack (0)

Saturday, January 3, 2015

California Estate Attorney Ordered to Return Trust Funds

Gavel2A lawyer in Encinitas, California has been ordered to $4.3 million dollars to the trust of a former client. Siv Ljungwe, who died in 2010, left her assets  to a trust and named her estate attorney Carl Dimeff as the beneficiary. The validity of the trust was challenged by four non-profits that were named as beneficiaries by Ljungwe in a previously drafted trust. A Superior Court Judge found that improper influence by Dimeff on Ljungwe, who was suffering from mental illness, invalidated the later trust and ordered Dimeff to return the money he had received plus penalties and interest.

See Greg Moran, Attorney Ordered to Pay $4.5M to Trust, U-T San Diego, Dec. 31, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

January 3, 2015 in New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, December 29, 2014

Attorney Accused of Stealing From Client's Estates

Gavel 3

Hired to oversee the estates of deceased loved ones, Robert DePalma, 53, is now accused of stealing $700,000 by Queens County District Attorney Richard A. Brown. 

DePalma, who has a law office in St. George and is a former prosecutor at the Staten Island District Attorney’s Office, was charged with second-degree grand larceny and first-degree scheme to defraud during his arraignment in criminal court. 

According to the charges, one of DePalma’s clients sold a home for $274,00 but never saw the proceeds.  Another client was scammed out of $150,000 following the sale of their deceased mother’s Staten Island property.  DePalma also told another client that proceeds from a real estate sale was being held in escrow, when in reality it was deposited into his bank account.

“The defendant is accused of breaching his fiduciary duty and unjustly enriching himself at the expense of his clients.  Such allegations cannot go unpunished.”  If convicted, DePalma faces up to fifteen years in prison. 

See Mira Wassef, Staten Island Attorney Accused of Embezzling $700,000 From His Clients, SI Live, Dec. 26, 2014.

December 29, 2014 in Estate Planning - Generally, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Monday, December 22, 2014

Estate Planning in an Age of Instant Gratification

Instant gratification

Living in today’s age of instant gratification makes work in the estate planning field especially challenging.  Many clients expect instantaneous responses to their questions, immediate solutions to their concerns and often have unrealistic expectations that the estate planning process will be smooth and the results will be seamless. 

So, what can be done?  First, recognizing the existence of this phenomenon is important in order to set realistic expectations for clients.  More importantly, estate planning practitioners need to set accurate expectations for themselves and forego taking on more work and responsibilities than possible. 

See Avi Z. Kestenbaum, Practicing in the Age of Instant Gratification, Wealth Management, Dec. 22, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

December 22, 2014 in Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 16, 2014

New Case: Fabian v. Lindsay

Gavel2

In Fabian v. Lindsey, the Supreme Court of South Carolina held that a third-party beneficiary has a cause of action for the lawyer’s error in defeating client’s intent.  

After the death of the decedent’s surviving spouse, one-half of the trust property was given to the children of his surviving spouse and the other half to his brother if he survived the decedent, which he did; if he did not, one-quarter to brother’s child and one-quarter to Erika, the child of another brother who predeceased the decedent. The brother died a few weeks after decedent and by the terms of the trust half of the trust remainder passed through his estate to his child. Erika would receive nothing even though two of the three trustees, including the widow and the decedent’s financial advisor, agreed that the trust failed to carry out the decedent’s intent to treat his brother’s child and Erika equally. Erika brought a proceeding to reform the trust, which ended with her accepting a settlement in which she specifically did not release any malpractice claims against the firm that drafted the trust.  She then brought an action for malpractice and breach of contract against the law firm that drafted the trust instrument.  The trial court granted the defendants’ motion to dismiss for failure to state a claim, but on appeal the Supreme Court of South Carolina reversed, recognizing for the first time a cause of action in both tort and contract by a third-party beneficiary of an estate planning document against a lawyer whose drafting error “defeats or diminishes the client’s intent.” Two justices concurred in the recognition of the tort action but not of the contract action; and they and another justice stated that the burden of proof, not discussed by the majority opinion, should be clear and convincing evidence. Fabian v. Lindsey, No. 27460, 2014 WL 5462562 (S.C. Oct. 29, 2014).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

December 16, 2014 in Estate Administration, Estate Planning - Generally, New Cases, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Representing a Client With Diminished Capacity

ScaleA recent  Ethics Opinion from the Colorado BAR Association analysis the ethical issues and delicate balance between protecting a client and maintaining a normal lawyer-client relationship when an attorney is representing an adult client with diminished capacity when the representation is not in protective proceedings, such as guardianship and conservatorship. Provided below is the syllabus from the opinion:

There are times when a lawyer may need to consider whether the adult client's capacity to make adequately considered decisions relating to the representation is diminished. Should the lawyer reasonably conclude that the client's capacity is diminished in such a manner as to impair the client's ability to make adequately considered decisions regarding the representation or to give informed consent to a course of conduct by the lawyer when required, the lawyer must maintain a normal lawyer-client relationship with the client insofar as reasonably possible. If the lawyer reasonably believes that the client's diminished capacity places the client at risk of substantial physical, financial or other harm unless action is taken, and that the client cannot adequately act in the client's own interests, the lawyer should consider whether to take reasonable protective action necessary to protect the client's interests. In taking such protective action the lawyer should be guided by the wishes and values of the client and the client's best interests, and any protective actions taken should intrude into the client's decision making authority to the least extent feasible. In taking protective action the lawyer is impliedly authorized to disclose information relating to the representation which Colo.RPC Rule 1.6 would otherwise prohibit, but only to the extent reasonably necessary to protect the client's interests. Care should be taken to insure that information disclosed cannot be used against the interests of the client. Differences may arise between the lawyer and client regarding whether or to what extent the client’s capacity is diminished; whether the lawyer should reveal information regarding the client’s condition, or whether the lawyer should take any actions to protect the client. These differences may present conflicts between the interests of the client and those of the lawyer and the lawyer must assess whether representation of the client will be materially limited as a result.

Special thanks to Michael Kirtland (Attorney, Colorado Springs, CO) for bringing this opinion to my attention.

December 16, 2014 in Disability Planning - Health Care, Elder Law, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Saturday, December 13, 2014

Trust Administration Planning

Trust administration

A trust is a common structure utilized to realize widely recognized and accepted freedom of disposition.  The law of trusts permits the grantor to set forth a private law that both permits and restricts the use of property for the benefit of two or more people, either simultaneously or in succession. 

While trusts are an effective vehicle for wealth management, there is room for disagreements about “who gets how much and when.”  Whatever benefits a trust may provide, conflicts can offset those gains and inflict a burden on the management of the wealth subject to the trust.  Thus, in order to minimize burdens that may result in litigation, every trust should have an administration plan.

A trustee has four rudimentary tasks: to secure and protect the trust assets; invest the trust assets; make distributions to the beneficiaries; and keep records, file tax returns and meet compliance obligations.  The trustee is subject to the highest levels of fiduciary duties, and often come into focus when a dispute arises between the trustee and one or more beneficiaries.  Accomplishing the trustee’s basic tasks may be more complex. 

When an individual trustee takes on a new trust, it is helpful to exercise to follow the common corporate trustee practice of creating a “head sheet.”  The head sheet contains a summary of the key provisions and elements of the trust, including grantor, current and successor trustees, current and successor beneficiaries, remaindermen, purpose and goals tax status, etc.  As part of the trust administration plan, the head sheet should be reviewed and updated.  The significant elements of any trust administration will change over time. 

See Joseph C. Mahon and Patricia Angus, Planning Trust Administration to Avoid Conflicts, Wealth Management, Nov. 21, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

December 13, 2014 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)